Short answer. Only the contracts the law itself lists. Rescission for damage is not a general remedy you can invoke whenever a deal hurts you — the Civil Code allows it in specific, closed situations, mainly contracts that cause serious loss to wards and absentees, and contracts made to defraud creditors.
What the law says
Contracts validly agreed upon may be rescinded in the cases established by law.
Civil Code, Article 1380 — Rescissible Contracts. Read the full provision →
A rescissible contract is a valid contract
The first words of Article 1380 of the Civil Code are the ones people miss: validly agreed upon. A rescissible contract is not defective. Consent was real, the object was lawful, the cause was there. Nothing about how it was formed is wrong.
What is wrong is its effect. It causes economic damage to somebody — a party who could not protect himself, or a creditor left with nothing to collect from. The law's answer is not to declare the contract a nullity but to undo it, so far as necessary, to repair that injury. This is why rescission is described as a remedy of last resort rather than a defect in the contract.
"In the cases established by law" — a closed list
The article's second half is the real limit. Rescission is available only in the situations the Civil Code and other statutes specify. Broadly, these are contracts entered into by a guardian where the ward suffers serious loss, contracts made by a representative on behalf of an absent person causing the same kind of loss, contracts made in fraud of creditors who cannot otherwise collect what they are owed, contracts over property under litigation entered into without the approval of the court or of the litigants, and any other case the law expressly declares rescissible.
If your situation is not on that list, the answer is not rescission under this chapter — it is some other remedy, or none.
The remedy is subsidiary, and it is limited
Rescission of this kind cannot be demanded if the injured party has another legal way to obtain reparation. A creditor who can still collect from other property of the debtor is expected to do that first. This is what makes the remedy subsidiary.
It also reaches only as far as the damage. Rescission creates an obligation to return what was received, with fruits and interest, and it cannot proceed where the person who is required to return is unable to do so. And it will not touch things already lawfully in the hands of a third person who acquired them in good faith — the injured party is then left with a claim for damages against whoever caused the loss.
Do not confuse it with cancelling for breach
Everyday speech calls almost any cancellation "rescission", and contracts themselves often use the word for the right to walk away when the other side does not perform. That right exists, but it lives in the law on reciprocal obligations, not in this chapter, and it works on different requirements and different deadlines.
The distinction matters because rescission under Article 1380 runs on a short prescriptive period, and a claim filed under the wrong theory can be lost on that ground alone. If you think a contract has stripped you of something you were owed — as a creditor, a ward, or the family of someone absent — get the facts assessed by a lawyer early, while the clock is still on your side.
Cases citing this provision
These Supreme Court decisions cite the provision above. We list them so you can read them yourself; the summaries of what each decided are not ours to give.
- Pryce Corporation vs. Philippine Amusement and Gaming Corporation, G.R. No. 157480, May 6, 2005 — read the decision on LawPhil →
- Salvador Adorable, et al. vs. Court of Appeals, et al, G.R. No. 119466, November 25, 1999 — read the decision on LawPhil →
- Ofelia C. Lavibo, et al. vs. Court of Appeals, et al, G.R. No. 123462, April 10, 1997 — read the decision on LawPhil →